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CRM Vendors Join Warnings Parade

The spate of companies issuing earnings warnings hit the customer relationship management software space particularly hard this week with several companies reporting that losses would be worse than expected in the second quarter.

The spate of companies issuing earnings warnings hit the customer relationship management software space particularly hard this week with several companies reporting that losses would be worse than expected in the second quarter.

E.piphany predicted second-quarter earnings of just $19 million, down from $32.3 million in the same period a year ago. License revenues are expected to fall from $16.3 million to $6.5 million. The total revenue projection would miss analysts consensus estimate by more than $4 million. E.piphany officials said the companys net loss would be 18 cents per share, compared with analysts estimate of 16 cents a share.

Further reading

"It doesnt look like anyone is having an easy time," Siboni said during a conference call with analysts.

E.piphany is hardly alone. After touting its reaching of profitability, albeit on a pro forma basis, in the first quarter, Kana warned that it would fall solidly back into the red in the second quarter, with an expected net loss ranging from $24 million to 30 million.

Revenues are expected to reach $17 million for the company in the quarter.

"While we have built a strong pipeline of business through our strategic partner relationships, as the quarter came to a close we saw a number of buying decisions delayed into the second half of this year," said Kana President and CEO Chuck Bay in a statement, in what is becoming a familiar refrain throughout the industry.

Siebel meanwhile did not warn of falling revenues or earnings, but had its estimates cut by one analyst for the second time in a month, citing a weakening European market. Europe is said to count for one-third of Siebels revenues.

Vendors in different areas of CRM were affected. Call center software vendor Aspect warned of an operating loss of between $8 million and $9 million on $95 million to $97 million in revenues.

Beatriz Infante, Aspects chairman, CEO and president, blamed sales weakness in North America for the shortfall.

"Due to continued tight expense controls, we were able to minimize the bottom line impact; nevertheless, we will accelerate our cost reduction program," said Infante in a statement, detailing a new cost-reduction program that would reduce expenses by $8 million to $12 million a quarter and return the company to profitability by the years end.

Primus, which provides contact center and knowledge management software, also endured a tough quarter, and expects to record just $4.2 million in revenues down from $6.52 million in the same period last year. Its loss will range from 16 to 19 cents per share.

President and CEO Mike Brochu said sales activity was up, the company just hit some "delays" in closing deals.

Business intelligence vendor MicroStrategy Inc. apparently sees little hope for the CRM space. The company ended an OEM agreement it had with Exchange Applications Inc., which had provided the marketing automation software in MicroStrategys eCRM 7 application, first launched in August 2000.

In ending the OEM relationship, MicroStrategy announced Tuesday that it is exiting CRM application development and focusing solely on business intelligence.